An efficiency analysis of Veterans Health Administration hospitals

This study evaluates the efficiency of Veterans Health Administration (VHA) hospitals using a variable-returns to scale, input-oriented, data envelopment analysis method. Hospital executives, health care policymakers, taxpayers, and ultimately the veteran patient population benefit from studies that look to improve the efficiency of the VHA. Data for 131 VHA hospitals in 1998 and 121 in 2001 were analyzed by using data envelopment analysis to measure hospital efficiency. The results indicated that efficiency in VHA hospitals improved from 85% in 1998 to 86% in 2001. Although this level of efficiency is commendable, the study documents potential savings through more efficient use of resources. From a management perspective, this study shows opportunities for improved management and the realignment of resources to better meet demand. From a policy perspective, the study highlights the political problems associated with improving efficiency and providing access to critical health care services.